Qantas to delay delivery of A380s, boost domestic capacity

Qantas Airways will delay the delivery of two Airbus A380 aircraft to further cut capital expenditure and to help streamline operations.

The aircraft, which was originally due to be delivered in early 2013, will now be delivered in 2016 or 2017, said CEO Alan Joyce at a conference in Australia. The carrier's remaining six A380s on order will be delivered from 2018 to 2019.

Qantas now operates 12 A380s.

The move will allow the carrier to cut capital expenditure in the 2012-13 period to A$1.9 billion from A$2.3 billion.

Joyce also announced that the carrier, which has a 65% share of Australia's domestic market, will increase capacity on domestic routes to strengthen its network in the business and leisure sectors.

It will add services during peak periods on core east coast business routes between Sydney, Melbourne and Brisbane, reintroduce Boeing 747s on the Sydney-Perth route and more A330s on the Melbourne-Perth route, to boost capacity.

Its low-cost arm Jetstar will increase capacity in key leisure markets and regional carrier QantasLink will increase capacity across Queensland with the introduction of Fokker F100 services between Brisbane and Emerald.

"Our goal in the domestic market remains simple and consistent: we intend to retain the market share that enables us to maximise profit," says Joyce.

The carrier is also finalising a review of its heavy maintenance arm and assessing its options to consolidate its facilities, likely resulting in a reduction in staff. An announcement will be made in May.

"We are focused on making changes that will increase productivity and competitiveness in a range of areas, including modernising and consolidating our catering operations, streamlining heavy maintenance and introducing new engineering processes," says Joyce.

In February, the carrier said it will delay the service entry of its Boeing 787-8 fleet to slash capital spending.

Qantas's international operations incurred a loss of A$200 million in the last financial year ending 30 June 2011. The carrier then announced a new strategy to improve fleet economics, deepen alliances, withdraw from loss-making routes and modernise operational practices.

It also has long-term plans to set up a new premium carrier based in Asia, but decided to postpone those plans by a few years after failing to find the right partner. The airline said in March that talks with Malaysia Airlines fell through as they were "unable to reach mutually agreeable commercial terms".